What We Need for Full Rebound of the Real Estate Market

Before a full rebound in the residential real estate market, we need:

Job growth/broader economic gains

Particularly important is the unemployment rate among young Americans between 25 and 34 years old.

Clarity on foreclosure processes

A group of states has banded together to sue lenders and mortgage servicers over what they claim to be improper foreclosure practices.  This has caused confusion in what should be the proper procedure.

Faster foreclosure processes

Getting homes that are likely to be foreclosed upon or homes that already are in foreclosure to the market is key to exposing the nation's shadow inventory, which has been keeping prices depressed around the country. 

Reduced inventory

Banks and servicers know how to do it. It's called lower the price. The problem is they don't want to lower the price too much because they're very nervous about taking huge losses. Huge losses sometimes leave the taxpayer on the hook, making the entire issue intensely political.

Increasing rents.

Rent needs to increase to a point where it's more attractive to buy a home than to continue renting.

CONCLUSION: 

With affordability at record levels, when the jobs market recovers and the economy finds its footing, more renters should turn into homeowners, which will reduce the supply of homes and help stabilize prices.  A good, healthy market emerges.

Credit for this post:   Yahoo Finance of Dec. 2